Forecasting is the process of making predictions or estimates about future events based on past and present data. It involves analyzing historical data patterns to identify trends, seasonality, and other factors that can help predict future outcomes. In business, forecasting plays a crucial role in decision-making, resource allocation, and planning strategies.
Corporación Favorita(subsequently referred to as Favorita Corp.) is an Ecuadorian based franchise with locations in 6 countries around the region and business in the commercial, industrial and real estate sectors.
Favorita Corp. faces challenges in forecasting product demand accurately for its grocery stores. Current subjective forecasting methods lack data-backed insights and are not easily automated. As the company expands with new locations and products, and amidst ever-changing seasonal tastes and marketing strategies, the forecasting problem becomes more complex.
Time Series refers to a continuous period or a collection of time. Time Series data is data with some continuous period attribute to it.
Examples are:
- Student attendance count over a semester for an intro to forecasting class
- Weekly IoT click rate for a truck sensor
- Sleep Duration for the past year
Each of the examples has a period attribute italicized
Forecasting methods can vary depending on the nature of the data and the specific problem at hand. Some common types of forecasting include:
- Demand Forecasting: Predicting the future demand for products or services. This type of forecasting is crucial for inventory management, production planning, and pricing strategies.
- Sales Forecasting: Forecasting future sales based on historical sales data, market trends, and other relevant factors. Sales forecasting helps businesses anticipate revenue and plan resources accordingly.
Accurate forecasting can significantly benefit Favorita Corp. and the retail industry as a whole.
- By reducing food waste related to overstocking.
- By ensuring product availability, it can improve customer satisfaction.
- It can optimize inventory management, leading to cost savings.
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